GungHo Online Entertainment : Financial Results Briefing Session for the 2nd Quarter of Fiscal Year Ending December 31, 2020

FY2020 Q2

Financial Results Briefing

GungHo Online Entertainment, Inc.

2020.8.7 (Tokyo Stock Exchange First Section-3765)

Table of Contents

1

2

3

4

5

Creation of New Values

Maximization of Existing Values

Partner Publishing

Subsidiary's Business

Summary of Results for FY2020 Q2

© GungHo Online Entertainment, Inc. All Rights Reserved.

1

Table of Contents

1

2

3

4

5

Creation of New Values

Maximization of Existing Values

Partner Publishing

Subsidiary's Business

Summary of Results for FY2020 Q2

© GungHo Online Entertainment, Inc. All Rights Reserved.

2

"Ninjala"

	Nintendo Switch Logo - Nintendo Switch is a trademark of Nintendo.
© GungHo Online Entertainment, Inc. All Rights Reserved.	3

New title Start of " Ninjala" Service

Global Launch of "Ninjala," a Free-To-Play Title for Nintendo SwitchTM

"Ninja Gum Battle Action" for the Nintendo Switch™

Simultaneous global deployment in North America, Europe, Asia, and Japan

Free to play

Multiplayer action for all ages

Scheduled to make a steady stream of various updates

© GungHo Online Entertainment, Inc.

Title:	Ninjala
Genre:	Ninja Gum Battle Action
Number of	1 - 8 players
Players:
Platform:	Nintendo SwitchTM
Release	Download ver. June 25, 2020
date:	Package ver. July 22, 2020
Price:	Download ver. Free to play
	Package ver. JPY 3,980
	* Tax included
	* Additional content and in-app purchases
	available
	* Online play is possible without registering
	with Nintendo Switch Online
Supporting	English, Japanese, French, Italian,
language:	German, Spanish, Chinese
	© GungHo Online Entertainment, Inc. All Rights Reserved.
	© GungHo Online Entertainment/Puzzle & Dragons Project 2019/TV Tokyo
	(Traditional/Simplified), Korean
	N nte do Switch Logo - Nint n o Switch is a tr demark of Nintendo.
	4

In-Game Events Held

"IPPON MATSURI" and "Ninjala Pass Festival" Held

The 1st IPPON MATSURI

Event Period: July 22-27, 2020

A special event where prizes increase, distributed according to the number of "IPPON" scored by all players

The 1st Ninjala Pass Festival

Event Period: July 31 - August 11, 2020

An auspicious event where the number of tier points you can earn by achieving "Daily Ninja Duties" is increased and various rewards become easier to earn.

• By achieving tiers, you can obtain various rewards such as "Ninja Medals" needed for upgrading your "Shinobi Cards," costumes, and Jalas.

© GungHo Online Entertainment, Inc.

5

Major Update in Season 2

Season 2 Starts on August 27, 2020

Update Details

New stage	New costume	New Ninjala pass
New weapon	New Shinobi card

New stage Shinobi City		New weapons of board type

© GungHo Online Entertainment, Inc.

6

"Ninjala Game Card Package" Physical Release

Released Package ver.

『Ninjara Game Card Package』

Release date: July 22, 2020

Price: JPY 3,980 (tax included)

* Package version sold only in Japan

DLC Bundle Also Available

『Ninjala: Crow Tengu Bundle DLC Pack』

Release date:July 21, 2020 (PDT)

Price :$29.99

* DLC Bundle sold only overseas

© GungHo Online Entertainment, Inc.

Reserved.

Tokyo

Nintendo.

7

Promotion of "Ninjala"

Deployment of many types of promotions to reach a wide range of users

TV CM・TV program

・Broadcast throughout Japan from June 25 ・Broadcast on game program, news and kids show for TV

Cartoon animation

・Distributed new episode from July 30 ・New content will continue to be released in the future

Official livestream/ Developer diary video

Measures that utilize

famous streamers

Merchandising

• Official goods available in advance at selected Village Vanguard shops

Manga

Serialization starting in the June issue of "Corocoro Comic"

Exposure to the Media

for main game magazines

Online e-Sports event (TBD)

Collaboration event

© Shogakukan Inc. 2018 All rights reserved. No reproduction or republication without written permission.

Multi-faceted promotion measures developed to acquire a wide range of users

.

.

© GungHo Online Entertainment, Inc.

8

New title

U.S. Subsidiary-new Titles

G u n g H o O n l i n e E n t e r t a i n m e n t A m e r i c a , I n c .

© GungHo Online Entertainment, Inc.

9

"Volta-X"

© GungHo Online Entertainment, Inc.

10

Launch of titles developed in house by US subsidiary

Release of Strategy robot battle game "Volta-X"!

A new strategy game for Nintendo SwitchTM and Steam

Titles developed in house by US subsidiary (GungHo Online Entertainment America) available globally online

Battle other players online in real time

Story content also included

Tile: Volta-X

Genre: Strategy Robot Battling Game

Number of 1-2players Players:

Platform: Nintendo SwitchTM ,Steam Release date: August 12, 2020 (planned)

Price: $19.99

Supporting Japanese, English, French, language: Italian, German, Spanish,

Chinese(Traditional/Simplified)

Real time online battle		Freelycustomizeyourrobotwith avarietyof accessories

© GungHo Online Entertainment, Inc.

11

New Pipeline

About New Pipelines

© GungHo Online Entertainment, Inc. All Rights Reserved.

12

New Pipeline

7 New Pipelines

for Smartphones

for Consoles

© GungHo Online Entertainment, Inc. All Rights Reserved.

13

Table of Contents

1

2

3

4

5

Creation of New Values

Maximization of Existing Values

Partner Publishing

Subsidiary's Business

Summary of Results for FY2020 Q2

© GungHo Online Entertainment, Inc. All Rights Reserved.

14

"Puzzle & Dragons"

© GungHo Online Entertainment, Inc.

15

MAU Continues to Remain Firm

Golden week events reinvigorated MAU

Keep high-level MAU over the long term by continuously implementing various measures for new, existing, and dormant users.

User activity has been reinvigorated due to events that were held in the 2nd quarter of 2020

Main Events for 2020 2Q

Events for Golden week, collaborations with famous IP(including new collaboration)

P&D MAU in Japan

1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6

2017	2018	2019	2020
	© GungHo Online Entertainment, Inc.		16

Measures for Puzzles & Dragons

User activity activated with collaboration events

Golden Week event held from April 2020 was a hit, and boosted user activity

Enhance activity by providing continuous collaboration events with popular IP

Golden week's events		Collaboration events for 2020 2Q		Collaboration events for 2020 3Q

© GungHo Online Entertainment, Inc.

17

Table of Contents

1

2

3

4

5

Creation of New Values

Maximization of Existing Values

Partner Publishing

Subsidiary's Business

Summary of Results for FY2020 Q2

© GungHo Online Entertainment, Inc. All Rights Reserved.

18

"Ragnarok Masters"

© Gravity Co., Ltd. & Lee MyoungJin(studio DTDS). All rights reserved. © GungHo Online Entertainment, Inc. All Rights Reserved.

© GungHo Online Entertainment, Inc.

19

One Year Anniversary of Service Launch

Holding a commemorative event to celebrate the 1st anniversary of service launch

• Active usership continues to be stable as an event and major update commemorating the
  1st anniversary are implemented

1st Anniversary event		Collaboration event

Title	:	Ragnarok Masters
Category	:	RPG for everyone
Price: Free in-app purchases
Platform	:	iOS, Android
Release date	:	June 5, 2019

Major update

The major updates include new jobs, new maps, and high-difficulty dungeons

© Gravity Co., Ltd. & Lee MyoungJin(studio DTDS). All rights reserved. © GungHo Online Entertainment, Inc. All Rights Reserved.	20
© GungHo Online Entertainment, Inc.

Table of Contents

1

2

3

4

5

Creation of New Values

Maximization of Existing Values

Partner Publishing

Subsidiary's Business

Summary of Results for FY2020 Q2

© GungHo Online Entertainment, Inc. All Rights Reserved.

21

Gravity

Gravity's Business

© 2018 Gravity Co., Ltd. All Rights Reserved.	© 2018 Gravity Interactive, Inc. All Rights Reserved.	© 2018 X.D. Global Ltd. All Rights Reserved.
© 2018 Gravity Co., Ltd. All Rights Reserved.	© 2018 Gravity Interactive, Inc. All Rights Reserved.	© 2018 X.D. Global Ltd. All Rights Reserved.
© GungHo Online Entertainment, Inc. All Rights Reserved.		22

Global Deployment of "Ragnarok M: Eternal Love"

"Ragnarok M" continues to contribute to business results

Since June 2020, new maps, elements, and level unlocks have been introduced in each region as major updates, and will continue to steadily change the game.

2019/10/16

Start of distribution in Europe and

Russia

2017/10/12

Start of distribution in Taiwan,

Hong Kong, and Macau

2018/10/31

Start of distribution in Southeast Asia (11 countries)

2018/3/14 Start of distribution in South Korea

2019/6/5 Start of distribution in Japan

2019/1/9

Start of distribution in North America, South America, and Oceania (43 regions)

© 2018 Gravity Co., Ltd. All Rights Reserved. © 2018 Gravity Interactive, Inc. All Rights Reserved. © 2018 X.D. Global Ltd. All Rights Reserve

Continuous updates and events contribute to stable revenue

© GungHo Online Entertainment, Inc. All Rights Reserved.

31

Start of Distribution in Korea for Ragnarok ORIGIN

Start of distribution on July 7 in Korea

© Gravity Co., Ltd & Lee MyoungJin(studio DTDS). All Rights Reserved.

Reached No. 4 in the Korean App Store and Google Play Store sales rankings (as of July 13, 2020)

© GungHo Online Entertainment, Inc.

24

Ragnarok ORIGIN's Japan online launch decided

Currently in preparation for the launch in Japan

© GungHo Online Entertainment, Inc.

25

Gravity's Main new Pipeline

Titles scheduled for distribution

Mobile/MMORPG

Mobile/Story RPG

PC/MMORPG

		Ragnarok X: Next Generation			The Lost Memories:		Ragnarok Crusade:
		Taiwan/Hong Kong/Macau:			The Song of Valkyrie		Midgard Chronicles
		Scheduled for distribution in 2020			Scheduled for distribution in 2020		Korea: Scheduled for distribution in 2020
		South East Asia:
		Currently in preparation for the distribution
	Titles already launched
			Mobile/MMORPG		Mobile/SRPG

・Launched in South East Asia in January, 2020

・Launched in Taiwan, Hong Kong, Macau in

February, 2020

・Launched in Korea in March, 2020

Ragnarok ORIGIN			Ragnarok Tactics
Korea: Released in July 7, 2020			Global: Released in June 6, 2020	© Gravity Co., Ltd. All rights reserved. 26
	© GungHo Online Entertainment, Inc.

Table of Contents

1

2

3

4

5

Creation of New Values

Maximization of Existing Values

Partner Publishing

Subsidiary's Business

Summary of Results for FY2020 Q2

© GungHo Online Entertainment, Inc. All Rights Reserved.

27

Consolidated Financial Results- Quarterly

Revenue and profits increased QoQ due to contributions from the Golden week event

Performance in

Net sales

Non--

QoQ consolidated

Gravity

MAU continues to remain at a high level due to the P&D'sGolden week and collaboration events. Sales related to P&D increased QoQ

Ragnarok M remains stable in existing distribution areas. Sales increased due to the contribution of Ragnarok Online (PC), which started in-house distribution in Thailand on May 28, 2020.

2020 2Q

YoY Revenue decreased due to the stagnation of MAU for P&D

Operating income

QoQ Profits increased due to higher sales of Puzzles & Dragons and Gravity's Ragnarok Online

YoY Profits decreased due to a drop in net sales for P&D

net sales		operating income	(Unit：Billon yen)

35.07
	23.60	23.36	19.35	19.98	22.20
13.0	7.43				7.07
	5.06	2.84	5.27
2019.1Q	2019.2Q	2019.3Q	2019.4Q	2020.1Q	2020.2Q

© GungHo Online Entertainment, Inc.

28

Breakdown of Consolidated Sales Trends - Quarterly

Revenue increased QoQ for P&D, Ragnarok M remains stable, and other titles have also contributed

Non-

consolidated

Gravity

Due to favorably received events, Puzzles & Dragons' MAU was able to maintain its high levels, and QoQ revenue saw an increase.

Gravity started its in-house distribution of Ragnarok Online in Thailand on May 28, 2020 and increased its QoQ Revenue. Ragnarok ORIGIN, which started distribution in South Korea on July 7, 2020, is off to a good start.

Consolidate Net Sales Trend

					Consolidated excluding Gravity	Gravity
(Unit: Million yen)								35,073
35,000
								30,337
30,000									12,976
	25,723
									23,603 23,363
25,000	1,945	23,432		22,309	21,899			10,886				22,206
	2,404	20,840	20,807					19,351 19,982
				19,056			6,685	5,821
20,000			2,111	6,582
		6,360	6,073						7,426
				4,250						6,015
										6,103
15,000
10,000	23,778	21,027							22,097
	18,728					19,451
						16,918	17,542
			15,727	15,539	14,733	14,806				14,780
						13,247	13,967
5,000
0
	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q
		2017			2018			2019		2020

*Net sales indicate figure after consolidated adjustment.	29
© GungHo Online Entertainment, Inc.

GungHo Online Entertainment, Inc.

IR Group, Corporate Planning Department

[e-mail]

30